APRA’s new lending caps: REIQ calls for careful oversight

The Real Estate Institute of Queensland (REIQ) is urging caution following the Australian Prudential Regulation Authority’s (APRA) announcement that high debt-to-income (DTI) home loans will be capped at 20 per cent of new lending from February 2026.

Under the new measure, banks will be limited in how many loans they can issue where the borrower’s debt exceeds six times their income, with the 20 per cent cap applied separately to owner-occupiers and investor lending.

Most banks are already operating below this threshold, meaning APRA itself expects only a minor impact on the broader credit market in the short term.

APRA data shows high-DTI lending has risen most notably among investors, with around 10 per cent of new investor loans exceeding the proposed DTI limit (in the September Quarter 2025), compared to only 4 per cent of owner-occupier lending – even when including participants in the Federal Government’s Home Guarantee Scheme. By contrast, just 5.5 per cent of home loan originations exceeded a DTI of six in the June quarter 2025.

The REIQ has called on APRA to closely review the measure to ensure it does not undermine Queensland’s already fragile rental market.

REIQ CEO Antonia Mercorella said while some macroprudential intervention may be warranted from time to time, it was critical that the unintended consequences of this policy were carefully monitored, particularly for property investors.

“APRA plays an important role in maintaining financial stability, and we recognise this measure is intended as a preventative safeguard against overly leveraged lending,” Ms Mercorella said.

“However, this is the first time a restriction has been imposed to a debt-to-income ratio, and it is essential that APRA keeps a close eye on its real-world impacts - especially for property investors, who are the backbone of Queensland’s rental market.

“We support prudent lending, but we caution against measures that inadvertently penalise responsible investors and reduce housing availability.

“Property investors are typically well-informed and have a higher average taxable income than non-investors. For example, in 2022-23, around 39% of Queensland property investors had taxable income of more than $100,000 compared with around 20% for all taxpayers.

“While on the surface this change appears modest, the risk lies in gradually squeezing investors out of the market at a time when Queensland desperately needs more rental supply.”

Ms Mercorella said Queensland’s housing dynamics made it particularly sensitive to measures that disincentivise investors.

“Queensland has a higher proportion of renters than the national average, and investors currently account for around two in every five new home loans in our state,” she said.

“In simple terms, fewer investors means fewer rental properties, which ultimately pushes rents even higher for tenants already under pressure.

“Investors are not the enemy in the housing affordability debate, but a critical part of the solution. In a state like Queensland that relies so heavily on private investors to provide rental homes, policy settings must support and not stifle their participation.”

The REIQ warned that overly restrictive lending measures, when combined with existing supply constraints, risk worsening the imbalance between rental demand and available housing.

“The focus should be squarely on unlocking more homes – not constricting one segment of the market. We need a balanced approach that supports both rental supply and pathways to home ownership,” Ms Mercorella said.

Encouragingly, APRA has allowed exemptions for certain loan types, including loans to buy or build new homes and bridging finance for owner-occupiers, which should help maintain momentum in housing delivery.

ENDS

Media enquiries:
Claire Ryan, Media and Stakeholder Relations Manager, The Real Estate Institute of Queensland
M: 0417 623 723 E: media@reiq.com.au

Read another media release from the REIQ: Housing supply shortage is costing Queenslanders, says REIQ.

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